For all the “gigafactory” hype, Tesla doesn’t make batteries: Cell production is the responsibility of its Japanese partner Panasonic. The other leaders in the field are LG Chem and Samsung SDI,both listed subsidiaries of the namesake Korean conglomerates, which supply the electric-vehicle projects of Nissan, General Motors and BMW, among others.

.. Hot on the Koreans’ heels are two Chinese companies determined to supply the ballooning Chinese electric-vehicle market: BYD, 25% owned by Berkshire Hathaway and also an electric-car maker, and CATL, which is planning a $2 billion initial public offering in Shenzhen in the coming months.

.. These five companies and a few newcomers—among whom car makers are conspicuously absent—currently intend to build 24 factories with a total capacity of 332 GWh by 2021

.. Investors looking to benefit from this gold rush need to take a very long-term view. The capital requirements are vast, and the contracts being signed are at wafer-thin margins. Sam Jaffe, managing director of battery researcher Cairn ERA, says the companies are taking “the traditional Asian conglomerate approach” of prioritizing market share over profits.

.. And manufacturers are under intense pressure from environmental regulators to sell electric cars even though their cost is uncompetitive. The only solution for car makers will be to pile pressure on battery prices. Big new factories will enable suppliers to cut unit costs, but profits could get lost in the squeeze.

.. Investors may be better off looking further up the supply chain. The most valuable component of a battery is its cathode

.. The risk for these companies is that a radically new technology makes existing investments obsolete.

.. John Goodenough, a now 95-year-old professor at the University of Texas considered a founding father of the lithium-ion battery, this year claimed a breakthrough with “solid-state” cells, which sideline various problems by replacing a flammable liquid electrolyte with a hard layer. Toyota expects to sell cars with solid-state batteries by the early 2020s; British engineering firm Dyson has penciled in a 2020 launch date for a solid-state car.